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Westway Group, Inc. Announces Second Quarter 2009 Financial Results

NEW ORLEANS, Aug. 10 /CNW/ -- Westway Group, Inc. (OTC Bulletin Board:
WTWG) announced today the financial results for the three- and six-month
periods ended June 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090529/DA24496LOGO)
Highlights
-- Combination of shell company Shermen WSC Acquisition Corp. with
acquired operating businesses completed on May 28, 2009 and Company
changed its name to Westway Group, Inc.;
-- In connection with the business combination, there were one-time
business combination costs of approximately $13.7 million;
-- New Management team and Board elected to support strategy of long-term
growth in the public marketplace;
-- $100 million credit facility established to fund Company activities;
-- Announced opening of phase 1 of new custom built terminal in Houston,
Texas on June 15, 2009;
-- Acquisition of Stockton storage facility, located outside of San
Francisco, California, was completed on July 28, 2009.
Peter Harding, CEO, stated that, "we are very pleased to have completed
the first 33 days of Westway Group, Inc.'s existence as a public company
having integrated two substantial business enterprises--a bulk liquid storage
business and a liquid feed supplement business acquired from ED&amp;F Man--into
the framework of a public company."
"During these first 33 days, a new management team and board of directors
were elected with the common goal of long-term, profitable growth through a
public sector company. We completed a major credit facility which will
provide up to $100 million in financing to support our growth plans. On June
15, 2009, we opened phase I of a new state-of-the-art storage facility which
was custom built for a key new customer in Houston, Texas. Additionally, on
July 28, 2009, we completed the acquisition of a storage facility with 7.6
million gallons of capacity, located in the San Francisco Bay area."
In commenting on the Company's earnings for the second quarter ended June
30, 2009, Mr. Harding stated that, "besides being affected by the 33 day
shortened inclusion of the acquired businesses in the second quarter, actual
operating results were also impacted by several factors: (1) a quarter-to
quarter reduction in the through put of related party molasses stored at our
European facilities--although there may be a benefit realized later in the
year, if minimum through put levels are not met; (2) a negative effect of
foreign currency on our European activities due to significant weaknesses
among various currencies against the U.S. dollar, in particular the Euro,
Pound Sterling and Canadian dollar--since the end of the second quarter, all
major currencies have made a substantive recovery from the lows against the
U.S. dollar; the Company is evaluating the possible future use of foreign
currency hedging strategies where it deems appropriate; and (3) the months of
April through July are traditionally seasonal low months for our Liquid Feed
Supplements business."
"In addition," Mr. Harding continued, "we have several major facilities
under construction that will come on-line later in the year which will add to
our core earning capacity, notably Gray's Harbor, located in Washington State
and phase 4 of our Houston 1 facility. Earnings from these facilities will
not be fully reflected until the first quarter of 2010."
"We must emphasize that the results of operations for Westway Group, Inc.
only reflect the last 33 days of the calendar quarter ended June 30, 2009 for
the acquired businesses; and, as such, the numbers which are in our financial
statements for the quarter ended June 30, 2009 are not indicative of the
Company's full earning capacity."
"Demonstrable of this point and shown below are key operating metrics for
the acquired two operating segments for the first two quarters of 2009
presented separately on a pro forma basis as though the acquisition of these
businesses were combined with us as of January 1, 2009. You will notice that
there is a distinct seasonal aspect in the quarter-to-quarter performance of
the Feed Company-- the second quarter is historically weaker than the first
quarter, and the fall and winter quarters are normally the strongest."
Pro forma results for
---------------------
Three-months ended March 31, 2009
---------------------------------
(90 days of operations)
Bulk Liquid Storage Liquid Feed Supplement
------------------- ----------------------
Revenues $18.0 million $75.0 million
Gross Profit (adjusted
for other operating costs
and expenses) $10.2 million $7.4 million
Gross Profit Margin 56.7% 9.9%
EBITDA (1) $ 7.4 million $ 3.9 million
Pro forma results for
---------------------
Three-months ended June 30, 2009
--------------------------------
(90 days of operations)
Bulk Liquid Storage Liquid Feed Supplement
------------------- ----------------------
Revenues $16.9 million $56.5 million
Gross Profit (adjusted
for other operating costs
and expenses) $ 9.7 million $ 4.5 million
Gross Profit Margin 57.4% 8.0%
EBITDA (1) $ 7.7 million $ 1.8 million
The actual results for the two acquired operating segments for the quarter
ended June 30, 2009, which only include 33 days of operations for these
operating segments, are shown below.
Actual results for
------------------
Three-months ended June 30, 2009
--------------------------------
(33 days of operations)
Bulk Liquid Storage Liquid Feed Supplement
------------------- ----------------------
Revenues $ 6.1 million $19.7 million
Gross Profit (adjusted
for other operating costs
and expenses) $ 3.8 million $ 1.6 million
Gross Profit Margin 62.3% 8.1%
EBITDA (1) $ 2.7 million $ 0.8 million
Three-month Actual Consolidated Results-- See Summary Consolidated
Statement of Operations below.
(33 days of operations)
For the three-month period ended June 30, 2009, Westway Group, Inc. and
subsidiaries reported actual consolidated results comprised of total operating
revenues of $25.8 million, cost of sales and operating expenses of $20.5
million, and a resultant gross profit margin, after operating expenses, of
$5.3 million. Depreciation expense totaled $1.3 million and selling, general
and administrative expenses were $2.8 million.
As a result of the business combination transaction, there were one-time
business combination expenses totaling $13.7 million recorded in the second
quarter 2009 representing advisory, investment banking, legal, accounting, and
other professional and consulting fees. Excluding the business combination
expenses, actual consolidated earnings before income taxes, depreciation and
amortization ("ADJUSTED EBITDA') for the three-month period ended June 30,
2009, totaled $2.5 million. Net income available to common shareholders,
before business combination expenses, was $3.8 million.
After inclusion of the one-time business combination expenses, the
Company incurred a net loss available to common shareholders of ($9.9) million
($0.50 per share) for the three-months ended June 30, 2009.
Six-Month Actual Consolidated Results-- See Summary Consolidated
Statement of Operations below.
(33 days of operations)
The actual consolidated operating results of the Company for the
six-month period ended June 30, 2009 and explanations are essentially the same
as the results presented above for the three-month period due to the
accounting treatment for the business combination transaction and the shell
nature of the Company prior to May 28, 2009.
Forward-Looking Statements. This press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
We have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject
to known and unknown risks, uncertainties and assumptions about us that may
cause our actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as "may," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "continue," or the negative of such terms
or other similar expressions. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our form
10-Q filed today and other SEC filings.
About Westway Group, Inc. Westway Group, Inc. ("Westway") is a leading
provider of bulk liquid storage and related value-added services and a leading
manufacturer and distributor of liquid animal feed supplements. Westway
operates an extensive global network of 24 operating facilities providing
approximately 299 million gallons of total bulk liquid storage shell capacity
and 30 facilities producing 1.7 million tons of liquid feed supplements
annually. Our bulk liquid storage business is a global business with
infrastructure that includes a network of terminals offering storage to
manufacturers and consumers of agricultural and industrial liquids, located at
key port and terminal locations throughout North America, Western Europe and
Asia. Our liquid feed supplements business produces liquid animal feed
supplements that are sold directly to end users and feed manufacturers,
primarily supplying the beef and dairy livestock industries.
Note 1-EBITDA, as used herein, is defined as income (loss) before income
tax benefit (provision) and equity in loss of unconsolidated subsidiaries,
which is defined as the aggregate of gross profit plus depreciation and net
other expense (which includes interest expense net of interest income).
EBITDA is presented in this release because it is an important supplement
measure of performance and is frequently used by securities analysts,
investors and other interested parties in the evaluation of businesses. Other
companies may calculate EBITDA differently.
ADJUSTED EBITDA, as used herein, is defined as EBITDA plus one-time
expenses incurred in a business combination.
EBITDA and ADJUSTED EBITDA are not measurements of financial performance
under generally accepted accounting principles in the United States, which is
referred to as "U.S. GAAP," and should not be considered as an alternative to
cash flow from operating activities or as a measure of liquidity or an
alternative to net income as an indicator of operating performance or any
other measures of performance presented in accordance with generally accepted
accounting principles. Because EBITDA and ADJUSTED EBITDA are calculated
before recurring cash charges, including interest expense and taxes, and are
not adjusted for capital expenditures or other recurring cash requirements of
the business, it should not be considered as a measure of discretionary cash
available to invest in the growth of the business.
Income (loss) before
income tax benefit
(provision) and equity
in unconsolidated
subsidiaries
Reconciliation: 3 months ended 6 months ended
June 30, 2009 June 30, 2009
Actual Actual
------ ------
Income (loss) before
income tax benefit
(provision) and equity
in loss of unconsolidated
subsidiaries $(12,663) $(12,907)
--------- ---------
Depreciation 1,258 1,258
Total other expense 242 165
EBITDA (11,163) (11,484)
Business Combination expenses 13,697 13,697
ADJUSTED EBITDA 2,534 2,213
----- -----
Income (loss) before
income tax benefit
(provision) and equity
in loss of unconsolidated
subsidiaries
Reconciliation: 3 months ended 2009
-------------------
Actual Pro forma
------ ---------
June 30, June 30, March 31,
-------- -------- ---------
Storage Feed Storage Feed Storage Feed
------- ---- ------- ---- ------- ----
Income (loss) before
income tax benefit
(provision) $1,743 $417 $4,948 $850 $4,739 $2,921
Depreciation 931 321 2,770 984 2,657 988
Other income (expense) (30) (10) - - (2) 1
EBITDA 2,704 748 7,718 1,834 7,394 3,908
----- --- ----- ----- ----- -----
SUMMARY CONSOLIDATED BALANCE SHEET
(in thousands) As of
June 30, 2009 December 31, 2008
(unaudited)
----------- -----------------
Current assets $ 69,674 $138,665
Property, property and equipment 291,958 (2) -
Goodwill 97,014 (2) -
Other assets 8,697 712
Total assets $467,343 $139,377
Current liabilities 46,736 (2) 486
Deferred income taxes 66,608 -
Borrowings under credit facility 65,165 -
Deferred underwriters' fee - 3,312
Total liabilities 178,509 3,798
Commitments - 55,067
Stockholders' equity 288,834 80,512
Total liabilities and Stock. Equity $467,343 $139,377
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands) 3 months 6 months
-------- --------
ended June 30, ended June 30,
-------------- --------------
2009(3) 2008 2009(3) 2008
------- ---- ------- ----
Net revenues
Liquid Feed Supplements $19,682 $ - $19,682 $ -
Bulk Liquid Storage 6,085 - 6,085 -
Total revenues 25,767 - 25,767 -
Cost of sales-Liquid Feed 16,236 - 16,236 -
Gross profit 9,531 - 9,531 -
Other operat. costs &amp; exp 4,233 204 4,554 391
Depreciation 1,258 - 1,258 -
SG &amp; A 2,764 - 2,764 -
Other income (expense) (242) 306 (165) 1,322
Business combination expenses 13,697 - 13,697 -
ADJUSTED EBITDA 2,534 (204) 2,213 (391)
Net (loss) income applicable
to common stockholders (9,862) 73 (9,979) 490
Earnings(loss) per share basic (0.50) 0.00 (0.51) 0.03
Earnings(loss) per share diluted (0.50) 0.00 (0.51) 0.02
Note 2- Reflects the preliminary estimate of the purchase price
adjustment.
Note 3- Includes 33 days of actual operating results of acquired
operating segments from date of combination.